Not sorry I wanted to vote for Yuna- vampires were suspicious, and the info helps us.

I can think of two theories about Stephen's Night Kill:

-First, and this is the more likely one: Stephen was a vig, despite the whole "The Watch is against Night Kills" thing. If the Hippos have a Night Kill (is that confirmed? They must, right?), then giving the Watch a Night Kill to attack Hippos makes a certain amount of sense. (This would also imply that the Hippos killed Stephen, although it's tough to think of how they would get that super-building damage attack).

-Second theory, there is a dwarf/foreigner faction, and Stephen was also a part of it. This is based on two facts: First, in the canon, Sally the vampire turned out to be an agent of the dwarf king, albeit a benign one. Second, it's a little weird that someone who was solely part of the Watch would have a night ability that deliberately contradicts their goal.

That said, Theory #1 is far more likely. I just wanted to throw #2 out there- if there does turn out to be a group of dwarves, it's definitely possible that Stephen was a mole for them.